Welcome!

News Feed Item

GTT Reports Fourth Quarter and Full Year 2013 Financial Results

GTT Communications, Inc. (“GTT”) (NYSE MKT: GTT), a cloud networking service provider offering Tier 1 IP and Ethernet network solutions to multinational enterprises, today announced its financial results for the fourth quarter and year ended December 31, 2013. Highlights include:

Fourth Quarter

  • Revenue increased by 67 percent to $46.1 million as compared to $27.6 million in the fourth quarter of 2012
  • Gross Margin increased nearly 700 basis points to 36.2% compared to 29.3% in the fourth quarter of 2012
  • Adjusted Earnings before Interest Taxes Depreciation and Amortization (“EBITDA”)* increased by 108 percent to $8.0 million compared to $3.8 million in the fourth quarter of 2012
  • Income tax benefit of $2.4 million in the fourth quarter was driven by a valuation allowance release based on expanding profitability in the U.K. due to the Tinet acquisition
  • Other expense includes other non-cash expense of $4.1 million for the mark-to-market of warrants and other non-cash expense of $0.7 million related to the nLayer earn-out due primarily to significant stock price appreciation.

Full Year

  • Revenue increased by 46 percent to $157.4 million as compared to $107.9 million in 2012
  • Gross Margin increased over 500 basis points to 34.7% compared to 29.5% in 2012
  • Adjusted EBITDA increased by 80 percent to $24.3 million compared to $13.5 million in 2012
  • Other expense includes other non-cash expense of $8.7 million for the mark-to-market of warrants and other non-cash expense of $2.0 million related to the nLayer earn-out due primarily to significant stock price appreciation.

    * See “Annex A: Non-GAAP Financial Information-Adjusted EBITDA” for more information regarding the computation of Adjusted EBITDA.

“2013 was a pivotal year for GTT," stated Rick Calder, President and CEO. “We completed the integration of a transformative acquisition, and we surpassed our previously stated objective of $30 million in Adjusted EBITDA run rate. We broadened our ability to deliver complex, integrated cloud networking solutions to multinational customers worldwide, and we cemented a foundation on which we can scale the business to our next financial objectives of $400 million in revenue and $100 million in Adjusted EBITDA.”

“With a premier global network platform, an experienced management team, and a proven acquisition strategy, GTT is well positioned to accelerate revenue and EBITDA expansion through 2014. Our strategy is to extend the ubiquity of our network around the world, expand our portfolio of cloud networking services, and deliver exceptional client service with simplicity, speed and agility. GTT will emerge as the clear leader in meeting the unique cloud networking needs of our target multinational enterprise and carrier clients."

On a sequential basis, revenue, gross margin and Adjusted EBITDA all increased. Fourth quarter revenue increased 2.2% driven by new customer additions and new installations of on-net Ethernet and IP transit services. Gross margin expanded 170 basis points through sales growth in higher-margin on-net services, the migration of existing customers on-net, and further network cost efficiencies. Adjusted EBITDA increased 5.9% and the Adjusted EBITDA margin increased to 17.4% in the fourth quarter, up from 16.8% in the third quarter of 2013.

“GTT’s compelling business model of highly recurring revenue streams and low capital expenditures will continue to convert a very high percent of Adjusted EBITDA into unlevered free cash flow,” stated Michael R. Bauer, Chief Financial Officer. “In 2013, GTT spent less than 3 percent of revenue on capital, yielding $20.3 million in unlevered free cash flow. Coupled with our recently increased debt facility commitments, we continue to expand our financial flexibility to capitalize on new growth opportunities. We are focused on driving organic growth and extending our proven track record of successful, selected acquisitions. We are poised for a great start to 2014."

Conference Call Information

GTT will hold a conference call on Tuesday, March 18, 2014 at 10:00 a.m. Eastern Time to discuss its results for the quarter ended December 31, 2013. To participate in the live conference call, interested parties may dial 1.888.337.8169 or +1.719.325.2458, entering passcode 1798316. A simultaneous live webcast of the call will be available over the Internet at www.gtt.net, under the Investor Relations section of the site. A telephonic replay of the conference call will be available for one month and may be accessed by calling +1.888.203.1112 or +1.719.457.0820 and using the passcode 1798316. The webcast will be archived in the investor relations section of the company's web site www.gtt.net.

Forward-Looking Statements

This release includes certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, which reflect the current views of GTT Communications, Inc., with respect to current events and financial performance. From time to time, GTT Communications, Inc., which we refer to as “we”, “us” or “our” and in some cases, “GTT” or the “Company”, also provides forward-looking statements in other materials GTT releases to the public or files with the United States Securities & Exchange Commission (“SEC”), as well as oral forward-looking statements. You should consult any further disclosures on related subjects in our quarterly reports on Form 10-Q and current reports on Form 8-K filed with the SEC. Such forward-looking statements are and will be subject to many risks, uncertainties and factors relating to our operations and the business environment that may cause our actual results to be materially different from any future results, express or implied, by such forward-looking statements. Factors that could cause GTT’s actual results to differ materially from these forward-looking statements include, but are not limited to, the following: our ability to obtain capital; our ability to develop and market new products and services that meet customer demands and generate acceptable margins; our reliance on several large customers; our ability to negotiate and enter into acceptable contract terms with our suppliers; our ability to attract and retain qualified management and other personnel; competition in the industry in which we do business; failure of the third-party communications networks on which we depend; legislation or regulatory environments, requirements or changes adversely affecting the businesses in which we are engaged; our ability to maintain our databases, management systems and other intellectual property; our ability to maintain adequate liquidity and produce sufficient cash flow to fund our capital expenditures and debt service; technological developments and changes in the industry; our ability to complete acquisitions or divestitures and to integrate any business or operation acquired; our ability to overcome significant operating losses; and general economic conditions. Additional information concerning these and other important factors can be found under the heading "Risk Factors" in GTT's annual and quarterly reports filed with the Securities and Exchange Commission including, but not limited to, its Annual Report on Form 10-K. Statements in this release should be evaluated in light of these important factors.

About GTT

GTT operates a global Tier 1 IP network with the most interconnected Ethernet service platform around the world. We provide highly reliable, scalable and secure cloud networking services. Our clients trust us to deliver solutions with simplicity, speed, and agility that are unmatched by other network providers. For more information visit GTT www.gtt.net.

 
GTT Communications, Inc.
Consolidated Statements of Operations

(Amounts in thousands, except for share and per share data)

 
  Quarter Ended   Year Ended
December 31,   December 31, December 31,   December 31,
2013 2012 2013 2012
Revenue:
Telecommunications services $ 46,100 $ 27,584 $ 157,368 $ 107,877
 
Operating expenses:
Cost of telecommunications services 29,395 19,509 102,815 76,000
Selling, general and administrative expense 9,267 4,399 31,675 18,957
Restructuring costs, employee termination and other items 7,677 701
Depreciation and amortization 5,255   2,366   17,157   7,296  
 
Total operating expenses 43,917   26,274   159,324   102,954  
 

Operating income (loss)

2,183 1,310 (1,956 ) 4,923
 
Other expense:
Interest expense, net (2,784 ) (1,345 ) (8,408 ) (4,686 )
Loss on debt extinguishment (706 )
Other expense, net (5,525 ) (14 ) (11,724 ) (1,054 )
 
Total other expense (8,309 ) (1,359 ) (20,838 ) (5,740 )
 
Loss before income taxes (6,126 ) (49 ) (22,794 ) (817 )
 
Income tax (benefit) expense (2,442 ) 266 (2,005 ) 746
       
Net loss $ (3,684 ) $ (315 ) $ (20,789 ) $ (1,563 )
 
Loss per share:
Basic $ (0.16 ) $ (0.02 ) $ (0.95 ) $ (0.08 )
Diluted $ (0.16 ) $ (0.02 ) $ (0.95 ) $ (0.08 )
 
Weighted average shares:
Basic 23,192,750 19,089,970 21,985,241 18,960,347
Diluted 23,192,750 19,089,970 21,985,241 18,960,347
 
 
GTT Communications, Inc.
Consolidated Balance Sheets

(Amounts in thousands, except for share and per share data)

 
  December 31, 2013   December 31, 2012
ASSETS
Current assets:
Cash and cash equivalents $ 5,785 $ 4,726
Accounts receivable, net of allowances of $702 and $748, respectively 22,305 11,003
Deferred contract costs 1,975 1,346
Prepaid expenses and other current assets 2,878   1,877  
Total current assets 32,943 18,952
Property and equipment, net 20,450 5,494
Intangible assets, net 43,618 20,903
Other assets 7,726 2,614
Goodwill 67,019   49,793  
Total assets $ 171,756   $ 97,756  
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 20,983 $ 12,857
Accrued expenses and other current liabilities 26,999 13,301
Short-term debt 6,500 7,848
Deferred revenue 6,797   6,588  
Total current liabilities 61,279 40,594
Long-term debt 85,960 34,981
Deferred revenue 1,480 234
Warrant liability 12,295 2,288
Other long-term liabilities 1,232   2,620  
Total liabilities 162,246   80,717  
Commitments and contingencies
Stockholders' equity:
Common stock, par value $.0001 per share, 80,000,000 shares authorized, 23,311,023, and 19,129,765 shares issued and outstanding as of December 31, 2013 and 2012, respectively 2 2
Additional paid-in capital 76,014 63,207
Accumulated deficit (66,226 ) (45,437 )
Accumulated other comprehensive loss (280 ) (733 )
Total stockholders' equity 9,510   17,039  
Total liabilities and stockholders' equity $ 171,756   $ 97,756  
 

ANNEX A: Non-GAAP Financial Information

Adjusted EBITDA

Adjusted EBITDA represents operating income before depreciation and amortization on a non-GAAP (accounting principles generally accepted in the United States of America) combined basis for the periods presented, and adjusted to exclude certain one-time expenses including costs associated with employee terminations and other non-recurring items and non-cash compensation. GTT presents Adjusted EBITDA as a supplemental measure of GTT’s performance. GTT also presents Adjusted EBITDA because GTT believes it is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in its industry and in measuring the ability of issuers to meet debt service obligations.

In evaluating Adjusted EBITDA, you should be aware that in the future GTT may incur expenses similar to the adjustments in this presentation. GTT’s presentation of Adjusted EBITDA should not be construed as an inference that GTT’s future results will be unaffected by unusual or non-recurring items. Adjusted EBITDA is not a measurement of GTT’s financial performance under GAAP and should not be considered as an alternative to net income, operating income or any other performance measures derived in accordance with GAAP.

The following is a reconciliation of Adjusted EBITDA to operating income (amounts in thousands):

   
Quarter Ended Year Ended
December 31,   December 31, December 31,   December 31,
2013 2012 2013 2012
Operating income (loss) $ 2,183 $ 1,310 $ (1,956 ) $ 4,923
Depreciation and amortization 5,255 2,366 17,157 7,296
Restructuring costs, employee termination and other items 7,677 701
Non-cash compensation 573   170   1,466   610
Adjusted EBITDA $ 8,011   $ 3,846   $ 24,344   $ 13,530

More Stories By Business Wire

Copyright © 2009 Business Wire. All rights reserved. Republication or redistribution of Business Wire content is expressly prohibited without the prior written consent of Business Wire. Business Wire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

Latest Stories
Niagara Networks exhibited at the 19th International Cloud Expo, which took place at the Santa Clara Convention Center in Santa Clara, CA, in November 2016. Niagara Networks offers the highest port-density systems, and the most complete Next-Generation Network Visibility systems including Network Packet Brokers, Bypass Switches, and Network TAPs.
WebRTC services have already permeated corporate communications in the form of videoconferencing solutions. However, WebRTC has the potential of going beyond and catalyzing a new class of services providing more than calls with capabilities such as mass-scale real-time media broadcasting, enriched and augmented video, person-to-machine and machine-to-machine communications. In his session at @ThingsExpo, Luis Lopez, CEO of Kurento, introduced the technologies required for implementing these idea...
Why do your mobile transformations need to happen today? Mobile is the strategy that enterprise transformation centers on to drive customer engagement. In his general session at @ThingsExpo, Roger Woods, Director, Mobile Product & Strategy – Adobe Marketing Cloud, covered key IoT and mobile trends that are forcing mobile transformation, key components of a solid mobile strategy and explored how brands are effectively driving mobile change throughout the enterprise.
Apache Hadoop is emerging as a distributed platform for handling large and fast incoming streams of data. Predictive maintenance, supply chain optimization, and Internet-of-Things analysis are examples where Hadoop provides the scalable storage, processing, and analytics platform to gain meaningful insights from granular data that is typically only valuable from a large-scale, aggregate view. One architecture useful for capturing and analyzing streaming data is the Lambda Architecture, represent...
SYS-CON Events announced today that delaPlex will exhibit at SYS-CON's @CloudExpo, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. delaPlex pioneered Software Development as a Service (SDaaS), which provides scalable resources to build, test, and deploy software. It’s a fast and more reliable way to develop a new product or expand your in-house team.
The explosion of new web/cloud/IoT-based applications and the data they generate are transforming our world right before our eyes. In this rush to adopt these new technologies, organizations are often ignoring fundamental questions concerning who owns the data and failing to ask for permission to conduct invasive surveillance of their customers. Organizations that are not transparent about how their systems gather data telemetry without offering shared data ownership risk product rejection, regu...
With major technology companies and startups seriously embracing IoT strategies, now is the perfect time to attend @ThingsExpo 2016 in New York. Learn what is going on, contribute to the discussions, and ensure that your enterprise is as "IoT-Ready" as it can be! Internet of @ThingsExpo, taking place June 6-8, 2017, at the Javits Center in New York City, New York, is co-located with 20th Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry p...
Extreme Computing is the ability to leverage highly performant infrastructure and software to accelerate Big Data, machine learning, HPC, and Enterprise applications. High IOPS Storage, low-latency networks, in-memory databases, GPUs and other parallel accelerators are being used to achieve faster results and help businesses make better decisions. In his session at 18th Cloud Expo, Michael O'Neill, Strategic Business Development at NVIDIA, focused on some of the unique ways extreme computing is...
The Internet of Things will challenge the status quo of how IT and development organizations operate. Or will it? Certainly the fog layer of IoT requires special insights about data ontology, security and transactional integrity. But the developmental challenges are the same: People, Process and Platform and how we integrate our thinking to solve complicated problems. In his session at 19th Cloud Expo, Craig Sproule, CEO of Metavine, demonstrated how to move beyond today's coding paradigm and sh...
FinTech is the sum of financial and technology, and it’s one of the fastest growing tech industries. Total global investments in FinTech almost reached $50 billion last year, but there is still a great deal of confusion over what it is and what it means – especially as it applies to retirement. Building financial startups is not simple, but with the right team, technology and an innovative approach it can be an extremely interesting domain to disrupt. FinTech heralds a financial revolution that...
SYS-CON Events announced today that IoT Now has been named “Media Sponsor” of SYS-CON's 20th International Cloud Expo, which will take place on June 6–8, 2017, at the Javits Center in New York City, NY. IoT Now explores the evolving opportunities and challenges facing CSPs, and it passes on some lessons learned from those who have taken the first steps in next-gen IoT services.
As organizations realize the scope of the Internet of Things, gaining key insights from Big Data, through the use of advanced analytics, becomes crucial. However, IoT also creates the need for petabyte scale storage of data from millions of devices. A new type of Storage is required which seamlessly integrates robust data analytics with massive scale. These storage systems will act as “smart systems” provide in-place analytics that speed discovery and enable businesses to quickly derive meaningf...
SYS-CON Events announced today that WineSOFT will exhibit at SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Based in Seoul and Irvine, WineSOFT is an innovative software house focusing on internet infrastructure solutions. The venture started as a bootstrap start-up in 2010 by focusing on making the internet faster and more powerful. WineSOFT’s knowledge is based on the expertise of TCP/IP, VPN, SSL, peer-to-peer, mob...
SYS-CON Media announced today that @WebRTCSummit Blog, the largest WebRTC resource in the world, has been launched. @WebRTCSummit Blog offers top articles, news stories, and blog posts from the world's well-known experts and guarantees better exposure for its authors than any other publication. @WebRTCSummit Blog can be bookmarked ▸ Here @WebRTCSummit conference site can be bookmarked ▸ Here
The Internet of Things can drive efficiency for airlines and airports. In their session at @ThingsExpo, Shyam Varan Nath, Principal Architect with GE, and Sudip Majumder, senior director of development at Oracle, discussed the technical details of the connected airline baggage and related social media solutions. These IoT applications will enhance travelers' journey experience and drive efficiency for the airlines and the airports.